KEY POINTS
- Bloomberg Intelligence expects China’s coking coal squeeze, triggered by May’s fatal Shanxi mine accident, to persist into 2027, with full normalization delayed to the first half of that year.
- August coking coal imports eased 4% from July to 13.1 million tons but stayed 29% above a year earlier, near December 2025’s record, as Beijing pushes suspended mines to reopen.
- Prices are cooling on weak steel margins, with just 7% of mills profitable in September; Dalian futures have fallen 12% from their August 31 peak of 1,729 yuan.
China’s coking coal shortage looks set to persist into next year, underpinning strong import demand even as a push to revive domestic output begins to cool prices, according to Bloomberg Intelligence.
The supply shock stems from a fatal mine accident in Shanxi in May, and analysts expect it to linger into 2027 as domestic production recovers only gradually under continued safety restrictions. Notably, rising shipments from Mongolia, Australia and Russia are helping offset the shortfall, though they are unlikely to close the gap entirely. Consequently, buyers abroad remain a crucial source of supply.
Imports stay elevated
The trade data tells the story. Specifically, Chinese coking coal imports slipped 4% from July’s peak to 13.1 million tons in August, yet still ran 29% above a year earlier and near the record set in December 2025. Moreover, Beijing’s National Development and Reform Commission has urged suspended mines to reopen faster, including lower-risk operations, as it moves to secure coal supplies.
According to BI analysts including Ortis Fan, Shanxi’s coking coal supply should stage a steady fourth-quarter recovery, though full normalization will likely slip to the first half of 2027.
Prices ease as mills struggle
Weak steel margins are dragging prices down. According to Wood Mackenzie’s Simon Wu, barely 7% of steel mills were profitable in September, leaving little room to absorb high coking coal costs. Meanwhile, a September 16 Mysteel survey found 75 mines still shut across Shanxi, representing nearly 73 million tons of annual capacity.
Prices have already retreated from recent peaks. Dalian coking coal futures, which closed at 1,729 yuan a ton on August 31, the highest in over two years, have since fallen 12% to 1,523.50 yuan. Ultimately, the market now balances a slow supply recovery against fragile demand from cash-strapped steelmakers.
